Asked by
NAMAN kumar
on Oct 19, 2024
Verified
A perpetuity pays $100 each and every year forever. The duration of this perpetuity will be ________ if its yield is 9%.
A) 7
B) 9
C) 9.39
D) 12.11
Perpetuity
A type of annuity that lasts forever, providing payments that continue indefinitely.
Yield
The income return on an investment, expressed as a percentage of the investment’s cost or current market value.
Duration
A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often noted in years.
- Become familiar with the process and impact of determining bond duration and modified duration.
Verified Answer
JN
Learning Objectives
- Become familiar with the process and impact of determining bond duration and modified duration.